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Tool 2: Finding and Tracking Property Owners

Rental registration and licensing programs are only as good as the extent to which they cover the great majority if not all of the city’s landlords. If only a small percentage of the city’s landlords are registered or licensed, and the city lacks a systematic means of gaining compliance from the rest, the ordinance is all but meaningless. There are some useful tools a city can use to ensure that most landlords register.

Notice requirements

In addition to requiring rental owners to register, cities can require notice when properties change hands, either at foreclosure sale or through subsequent conveyances. If a local government can routinely receive notice that a property has changed hands – and can flag key information, such as whether the property was an REO property and whether the buyer address is different from the property address – it can use that information to create a database, and to trigger a process by which the new owner is notified of the rental registration requirement. In jurisdictions with extended judicial foreclosure processes, such as New Jersey or Ohio, lenders or other entities initiating the foreclosure should also be required to provide notice, as required by New Jersey state law.

Cities and counties should work out agreements to ensure that cities receive the information they need to address property issues. Cities, however, must still set up and maintain a property database – either within city government or through a local university or research center – if the notice requirements are to be of any value.

Finding the properties

Hire a finder. The city of Minneapolis pays an “unlicensed property finder” to seek out unlicensed rental properties. The city charges any property found a $250 fine for failing to obtain a license prior to renting out the property, which most probably more than pays for the cost of the “finder.”

Whenever a real estate transaction takes place, the city should send a mailing to the buyer of record. The mailing should ask the buyer either to return a rental registration form with the appropriate information and fee, or a simple form attesting that the owner will not rent out the property.

Use technology. Tracking down unregistered properties lends itself well to the use of readily available technology, particularly if community residents can be enlisted to serve as the city’s eyes and ears on the ground. Many cities have set up web sites or 311 lines through which citizens can submit information or complaints to city government, while SeeClickFix is a privately-operated platform for citizens to submit complaints relating to a wide range of community concerns.

A simple and inexpensive system that cities can use is shown in the table below. It offers a straightforward way for residents to report potential unregistered rental properties, and a cost-effective way to bring what is likely to be the great majority of them into compliance. Once it has been set up, the public sector cost is little more than the cost of data entry and mailing. While it will not catch everyone, it will get most, other than the small number of owners determined to evade the system. Since the report has no direct consequences other than a letter to the owner, it does not raise legal issues.

Steps in a System to Find Rental Property Owners

from Alan Mallach, Meeting the Challenge of Distressed Property Investors in America’s Neighborhoods

The key step is to enlist citizens and neighborhood-based organizations in the process. There are far more citizens on the street than public safety and code enforcement personnel. As with code enforcement, giving them the opportunity to participate in a process that helps their neighborhood also leverages limited public sector resources.